Tata Trust begins process to find successor to Chandrasekaran

The Sir Dorabji Tata Trust on Thursday said it will initiate the process of setting up a selection committee to recommend a successor to N Chandrasekaran as chairman of Tata Sons after he decided not to seek another term.

Chandrasekaran, 63, on Wednesday informed the Tata Sons board that he would not offer himself for reappointment when his current five-year term ends on February 20, 2027.

The decision brings to an end a six-month impasse over his reappointment and rules out what would have been an unprecedented third five-year term at the helm of Tata Sons.

The Sir Dorabji Tata Trust (SDTT), one of the key shareholders of Tata Sons, said its trustees have passed a resolution to initiate the setting up of a selection committee "as soon as possible" in accordance with the Articles of Association of Tata Sons.

The committee will recommend a person for appointment as the new chairman of the board of directors.

"The SDTT respects Mr Chandrasekaran's decision not to offer himself for re-appointment. We place on record our deepest appreciation for his contribution and stewardship of Tata Sons and the Tata group over the past decade," the trust said in a statement.

It also extended its "full support" to Tata Sons in ensuring a smooth, timely and orderly leadership transition.

Chandrasekaran, who has spent 40 years with the Tata Group, said he was grateful for the opportunity to contribute to the institution.

"I have completed 40 years of professional life at the Tata Group. I am grateful for the immensely satisfying opportunity to contribute to this venerable institution," he said in a statement.

The decision follows months of differences over his reappointment.

Chandrasekaran said the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, which together hold 51.54 % of Tata Sons, had unanimously recommended extending his term by another five years.

The recommendation was recorded and backed by the Tata Sons Nomination and Remuneration Committee and board before being put to directors on February 24.

"However, the proposal was not carried through because one of the Board Members did not support it, and in the absence of unanimous support, I chose to defer the decision," he said.

"It has been 6 months since that Board meeting, and no resolution has been reached till date."

Chandrasekaran said the uncertainty could no longer continue as Tata Sons has several strategic projects at critical stages of execution.

"It is not only necessary to have a leader in place to lead the Group beyond February 2027, but also clarity on leadership is important for employees, investors, partners and other stakeholders," he said.

He said he had asked the Tata Sons board to decide on the succession soon to ensure a proper transition.

Tata Sons is the principal investment holding company and promoter of the Tata Group, which has more than 30 companies, including Tata Consultancy Services, Tata Motors and Air India.

The leadership tussle has come amid differences between the Tata Sons management and Tata Trusts over issues including the group's five-year strategic roadmap, board representation and capital allocation.

Another point of contention has been the long-debated question of listing Tata Sons.

Chandrasekaran was reportedly unwilling to commit that Tata Sons would never be listed, making a potential initial public offering one of the key fault lines between the operating company and its controlling trusts.

The board's differences, however, did not completely paralyse its functioning, with a Tata Sons meeting in May described as constructive by people familiar with the deliberations.

The selection process will now determine who succeeds Chandrasekaran, who took charge of Tata Sons in 2017.

The Tata Trusts collectively own about 66% of Tata Sons, giving the philanthropic arm a decisive influence over the group's governance.